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Your Business

News/Business. A focus on issues facing small business in the United States.

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Us 5, Chicago 3, American Express Open Gold Card 2, John Georges 2, J.j. Ramberg 2, New York 2, Sammy 2, Alexa 2, Michael 1, Kevin 1, Sam Chernin 1, Jerome 1, Valentine 1, Jonah Peretti 1, Michael Simmons 1, Jonah 1, Zuckerberg 1, James Hirschdale 1, Huffington 1, Facebook 1,
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  MSNBC    Your Business    News/Business. A focus on issues  
   facing small business in the United States.  

    February 4, 2012
    2:30 - 3:00am PST  

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two siblings' innovative approach to high-end invitations upsets the industry and gains clients like the white house. and the importance of being flexible. we'll have that and so much more coming up next on "your business." >> small businesses are revitalizing the economy. and american express open is here to help. that's why we are proud to present "your business" on msnbc.
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hi, there, everyone. i'm j.j. ramberg and welcome to "your business" where we give you tips and advice to help your business grow. in a world going paperless, institutions like the post office and traditions like engraved wedding invitations are quickly becoming a thing of the past. a brother and sister team saw there was a need for high-end online stationery. their innovative approach to bringing an offline product online change the landscape of the industry so much that its biggest competitor is taking notice. if you're like most americans, your life has gone electronic. you shop, bank, pay your bills and send e-mails all online. and even though there are plenty of ways to send digital invitations, when it came time
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to send one for his 21st better day party, james hirschdale was shocked he couldn't find a classy digital invitation on the web. >> i was between a rock and a hard place because i didn't have a budget to send paper invitations but i also found that the existing products for sending invitations online were not as customizable, not as beautiful, as what i would have wanted. >> the internet was full of sites that were a little bit more junkie, a little more low-end. didn't feel high-touch, didn't have that emotional quality. >> reporter: james, a sophomore in college, saw an opportunity. what better place than harvard to have the next big idea. >> people want to go to an internet to check out that big idea. >> 2,200 hits within 22 hours? >> thousand. 22,000. >> i got to harvard in 2006. and there was a really pervasive air of opportunity there in the
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wake of mark zuckerberg's leaving harvard and starting facebook. and there was a lot of sense that you could, you know, with a little bit of creativity and a lot of work, you could create a company on the web that would really affect people's lives. and i think that that rubbed off on me. >> reporter: the idea was simple. create a company that could effectively translate the look and feel of a tangible high-end paper invitation to the digital realm. the first person he shared his concept with was his sister alexa. >> he september talking about the tooth of the paper. i didn't know people had teeth. that idea of starting out with something that had all the visual qualities of something in the offline world that people understand. and having it be the most beautiful version of that online. like hyper-real, hyper-luxurious. i understood it because he kept talking about it. that's all he was saying. >> reporter: alexa loved the concept. so in 2007, while james was
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still a student at harvard, they pulled money from their own savings to start paperless post. >> from inception to launch, we had a little bit of a slow road because i was in school for a lot of the time and building a team as a first-time entrepreneur was one of the most difficult things we had to do. it took us about a year and a half to get to a place where we could allow outside users to come on and use the site. >> reporter: the idea quickly took off, gaining traction and new customers every time someone received a paperless post invitation. jonah peretti, co-founder of "the huffington post," was so impressed when he received one, he became an individualer and mentor to the pair. >> what the company has found is people are receivers first. they get a few, i keep getting these beautiful invitations and it's usually from a friend of mine who's a high-status friend, a person that i respect.
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maybe i should go and use the service. then they come and use the service, it spreads that way. >> reporter: more affordable than people stationery, environmentally friendly, and fast, paperless post attracted high-profile users and institutions like prince charles, condoleezza rice, the museum of modern art, and the white house. >> the website is simple to use. it's nice to send something that is going to reflect all the effort and energy you put into the party. >> reporter: with 50 million invitations sent and a service that is low-cost, everyone is taking notice, even the industry's largest player. e-vite recently launched postmark, a site remarkably similar. >> there's a lot of examples of big companies trying to copy what the nimble, innovative startups are doing. they have a lot of trouble, more than you'd expect. so i think in a way it validates the market. i think what you'll see is paperless post continuing to
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innovate because they're not copying, they're inventing. when you're invnting you understand the ideas in a deeper way. >> you only copy something that you think is the standard in the market. you don't copy an upstart. 11-year-old competitor. basically saying that they believe that what we're doing is the future. and not just what we're doing, but exactly what we're doing. >> so, should paperless post be worried about the 800-pound gorilla in the industry getting into their space? let's turn to this week's boards of directors. a principal at spark capital, a venture capital firm focused on media, entertainment and technology. and michael simmons is the co-founder and ceo of extreme entrepreneursh shiship tour, br do you remembers to places like colleges and universities. i love this story because as said in the piece, big companies often copy small companies and
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then fail. >> yeah. >> what is it? e-vite exists, they have a huge database of people, why is it that paperless post can be so confident? >> i think, you know, paperless post is an innovative company. jonah said it well. it's difficult. they came out with an idea that was novel and fresh. e-vite at the time had become quite stale. not just stale, but the products were clunky. it just didn't feel right to people. they came out with something that was fresh, unique, had a point of view, was beautiful. it really caught on. and the beauty of an invitation service on the web is that every recipient is a potential customer, right? so there's a natural virility built into the service. i think paperless post is a paradigmatic example of why young, upstart, nimble companies can win on the web, which is they focus on product, first and foremost, building a wonderful product that people love to use.
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and they really architect a simple service in a real branded proposition around that product that grows naturally and virally as each person touches it. >> in cases like these, often no barriers to entry, everybody can do the same thing, copy the same kind of thing. you grow your base. >> yeah. >> but when somebody comes in who has a bigger base, what do you do as a entrepreneur, as the person who is running this company, so that you don't get distracted by the competition? >> i think it varies by industry. you think about the main street business, i think one of your hugest assets is you as an individual. you're going to be more passionate about the idea, closer to the market, you're going to be able to talk to the market more and build closer relationships. so i think for the average main street business, that's a huge advantage. in the case of this online business, you know, jonah and james and alexa, they really have that understanding of the taste of the market and to get that virility. so i think they have a lot of advantages. i would still be worried but end
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of the day i would feel validated that this large company is making a big change based on our actions. >> i think you always have to expect as a young company, as a startup, if you go into an area that's promising and you have success, you have to assume that the 800-pound gorilla will come into that space at some point. when they -- first of all, you should be paranoid that they're going to. and even more paranoid when they do. >> if they don't. >> most paranoid if they don't, even more paranoid if they do. there's a balance between sort of paranoid, which kind of lights a fire under you, and distracted. so i think knowing alexa and james, i'm sure they're looking at it, thinking about it, paranoid about it. but all it does is say, we need to move faster, we need to innovate more, we need to build better product, we have to have other people touch this product. the reality is at this point, they've been at this a couple
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plus years, almost three, in market, and people know the brand. the brand paperless post means something now. when i get an invitation from paperless post, there's a certain, you know, je nais se quoi to it, it feels good, there's a sexiness to it. it has that higher-end positioning. you can come in and rip them off, exactly, but it's very difficult to replicate that magic. i think knowing them, they are going to continue to innovate on that product as much as possible and continue to occupy that brand positioning in the marketplace. you're not -- nobody's going to come in and say, i have a bag that looks just like this bag, and the person's going to say, great, there's my -- that's my hermes bag, and they've successfully built a brand. >> thanks very much, guys. >> thank you. if your website is subpar you're going to lose people's interest right away. here now are five necessities to make your company's site a great
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online resource courtesy of "entrepreneur magazine." number one, a clear description of your business. a visitor to your website shouldn't have to search around to figure out what you do. sum up your products and services on the home page. two, a simple, sensible web address. your domain name is your brand. it should be easy for users to remember and type. three, make your site easy to navigate. consider using drop-downs so visitors can see the content under every heading from any page. four, fresh quality content. add a regularly updated blog or connect our social media feeds to keep things fresh and relevant on your business's website. number five, know the basics of search engine optimization. use the correct key words throughout your text. put in plenty of links and include images and videos throughout your site. his ground-breaking new york city nightclub studio 54 was the hottest ticket of his day.
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his hotel morgans reinvented the style for chic boutique hotels. ian trigger is yet again turning heads with a collection of exclusive hoegs and restaurants around the world including the brand new public chicago hotel on that city's gold coast. we caught up with this trend-setting entrepreneur to find out how he manages to build the buzz and stay ahead of the curve in a down economy in this "learning from the pros." ♪ shake it shake it ♪ shake your groove thing shake your groove thing yeah, yeah ♪ >> it's an instinct, a feeling, this is what's happening, this is where people are going. the velvet rope came about, when we opened up studio 54, we were in a bad neighborhood. a lot of street people. we wanted to keep the street people out. so we put up the rope. then that kind of turned into a bit of a frankenstein monster.
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that smacked of elitism. it isn't about the velvet rope anymore for me. that was a good idea when we did it. and -- but i think its time has come and gone. ♪ got to move on >> the way we market is just by increasing your presence in the marketplace. we have a very, very successful restaurant here and it's a kind of new idea because it's very simple food, very low-priced and done by a gourmet chef. john georges. he came out with a book, you know, of course i have no interest in selling the book, i want to sell the hotel. so i thought it would be a perfect opportunity to have a party for that book to introduce john georges to people of chicago and for him to explain his idea directly. ♪ i need hot stuff >> nothing matters but the product. if the product is good, everything else kind of falls into place. you know, you come out with
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great product, really distinct, really unique, distinguishable from everything else out there in the marketplace, and the buzz and the success of it is a natural consequence of that. so it's not about marketing, execution, distribution. in my business, reservations, services. no. it's about distinctive product. ♪ >> you do a restaurant in london, they don't like music during the meal. nothing right or wrong about having music, just different customs and different cultures and you've got to be respectful of that. you have to be sensitive to that. it's like when in rome. you know, i think that something in miami wouldn't work in chicago and wouldn't work in new york. it's a kind of very distinct kind of ambiance. in a city like new york where we have five boroughs, each borough
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is different, each neighborhood is different. it's different. it's not hard to find these things but you've got to get out there and figure out what they are. ♪ good times, these are called good times ♪ >> in bad times, in times of turmoil when there's a kind of uncertainty, there are usually voids in the market that you can pick up on and fill. it wasn't about the bad economy, wouldn't do this hotel because the economy is bad, because that will change. but the bad economy is what made me focus on the value and the price. then i realized that i thought that people wanting to get a good price, it's not about the bad economy, it's a paradigm shift. people want value for their money now. if you're a contrarian like i am, bad times make people react to the bad times and behave a certain way. if you think contrary to that, you can seize an opportunity.
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♪ good times, these are called good times ♪ still to come, how are dating and owning a small business similar? the answers may surprise you. and hopefully our panel has a sweet tooth as today's elevator pictures treat them to chunky chocolate. sam: i'm sam chernin. owner of sammy's fish box. i opened the first sammy's back in 1966. my employees are like family. and, i want people that work for me to feel that they're sharing in my success. we purchase as much as we can on the american express open gold card. so we can accumulate as many points as possible. i pass on these points to my employees to go on trips with their families. when my employees are happy, my customers are happy. vo: earn points for the things you're already buying. call 1-800-now-open to find out how the gold card can serve your business.
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valentine's day is coming up and if you want to give some sweet treats to your sweetie, here's a thought. today's elevator picture hopes their chocolates will melt our panel's hearts. >> good morning. my name's jerome and this is kevin. we're co-founders of berkshire walk chocolate in western massachusetts where we make all-natural chocolate bars. what makes us unique in the market that is although we use the highest-quality ingredients, berkshire bark has a fun, unpretentious nature and an accessible price point. our use of chunky-size ingredients and fun flavor led epcurious.com to call us the ben and jerry's of chocolates. >> total sales of $160,000 in
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2011. we have national and regional distribution with product placement in over 150 retail stores. we were seek an investment of $500,000 for facility, improvements, equipment, and marketing. in return, we're offering a 14% return on investment with a possible equity position. >> all right, wow. if it is any indication these people did not only take one bite bite, i'll get one in a sec, thank you, they were eating the whole thing the whole time. so mo, you're a venture capitalist, you listen to pitches all day long, how did they do? >> i think they did quite well, actually. it was tight, concise. you made your point very clearly. i have a handful of questions that i'd ask. but i think, you know, you did what's really important in a pitch, which is encapsulate what it is that you do and what it is that's different about what you do succinctly, and also give people a chance to kind of touch and feel your product. obviously it's easier to do when
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you're selling chocolate versus making a website. in either case, actually, it's something that you can and should and need to do to get people excited about what it is that you're doing. >> all right. what about you? >> i love the sample as well. so i think that was a great element. i would also add that i love to hear more about the traction, you mentioned you had $180,000 about in revenue the past few years, i'd like to hear more about the story about that and your exact plans for how you could scale that larger. because at the end of day it tastes like a really good product but it's going to come down to the execution. >> all right. moment of truth. i think i know the answer. if this was the kind of industry you invested in, would you take another meeting? >> i'd try and make this meeting go a bit longer because my questions really are about, you know, five years is a reasonable amount of time, $180,000 is still a relatively modest amount of sales. and in order for a venture capitalist or verier to get return on their dollar, they
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really need to build this into a pretty sizable entity. so the growth story and how you really differentiate in what i know -- specialty foods market, not my daw day-area but something i know pretty well, is a really tough category. so i'd try to dig in a little bit of what you've done to date, how you're really going to be able to cross the chasm. >> what i think i'm hearing is you piqued interest enough -- >> i could hang out to see where it goes. >> how about you, michael? i love product and the presentation and kind of the same as mo, i really want to see more of the story, you're working full-time during that time? were you working part-time? and then how you're going to take it higher. >> all right, that's great. thank you both so much for bringing your idea here and your chocolate, very appreciated. and thank you guys for all your advice. and if any of you out there have a product or a service and want feedback from our elevator pitch panel on your chances on getting interested investors, just send us an e-mail.
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yourbusiness@msnbc.com. please include a short summary of what your company does, how much money you're trying to raise, what you intend to do with that money. you never know, somebody watching the show may be interested in helping you. it's time now to answer some of your business questions. mo and michael are with us once again. the first one is about developing a rapport with customers. >> how do i see the red flags in business? we know how to look for it in dating. how do we know when we're spending time with a potential client if they're really serious about our business or not? >> love this question because particularly in the beginning you just want to get any customer you can get, next thing you know you spent three weeks on someone who may not sign up or turns out to be an unproductive client. >> i personally, if you're business allows this, i love preorders. a lot of people, because they don't want to be awkward and say no, they'll say they're interested when they're not. i'd say the majority of people. the sooner you can get to the point where you have them say,
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actually pull out their checkbook and pay for something in advance before it's made, then i know i'm on to something. >> i just want to know how they know how to do this in the world of dating. that seems like an even tougher thing to me. assuming they figured that out, let me know. i would say a couple of things. one, i think honesty is really, really important. i think as a presenter as well as a recipient. meaning it's very disarming when somebody comes to you and says, here's what we're doing. they give you like a really quick pitch. this may or may not be for you. totally fine either way. but just kind of want to have a sense of where you are. just kind of put it on the table. it disarms the whole thing. all of a sudden people on the other side are not as worried about hurting your feelings, et cetera. because you sort of -- you own it right there in the moment. i think that is incredibly important. the other thing is just the process. you really have to have a very
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tight process for how you do these things. like a very brief pitch, a way that you follow up, and a very direct way of saying, if you're interested, let's move this thing forward. if you're not, that's okay too. and i think, you know, you could it's those simple devices to -- and they're fairly effective, believe it or not. >> okay. let's move on to the next one. this is an e-mail from rono. we are a self-funded online ad agency that is one year old. at what point in our growth should we seek investors? >> i have a very simple answer for that. when you need them. >> yep. >> never raise money if you don't have to. there's nothing better than having nobody's hands in your cookie jar. if you get to a point when you want to grow your business at a certain trajectory, you don't have the capital to do so, you start looking for investors. short of that, keep doing what you're doing. >> i would say really depends on the industry and your personal preferences as well, how how much you wanted to be diluted, is this a lifestyle business? many people do start businesses for that reason. i would look at those things and
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whether you have competitors as well. >> you know, if you feel like at some point you're going to need investors and you don't need them now, shouldn't you start at least developing some relationships? >> yeah, i mean, i think any entrepreneur that thinks they're in a business other than a lifestyle business, if you're in a lifestyle business the goal is to keep everybody outside of your life. >> yeah. >> but if you are in a business where you're trying to grow it as big as possible and you have big ambitions, either now or in the future, it's definitely important to have relationships in the financing community. just like you would with any other constituency or stakeholder, whether it's the press or whoever you need to get media on your company or banks to lend you money -- >> then when you sneed it you don't have to go through the first stage of figuring out who these people are -- >> 100%. networking, relationship building, part and parcel. >> this is about how to deal with customers. >> i would love to know how to ideally sort of deal with
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persons who are really precedes sensitive, hotels who are really precedes sensitive. >> price sensitivity. that's tricky. as a small business you're probably never going to be the lowest person there. >> well, i deal in the education market. when we were one-quarter of our price, usually when we were launching, people were complaining about price. now people complain about price. i think i would be -- in the beginning i like giving away things cheaper so i can see if there's engagement. once the idea works i like to stand on the price so you have price integrity and people don't talk. fundamentally, people who purchase at a smaller price may not be your target market. you may just be wasting your time, trying to get a customer that's not going to be with you when you raise your price. >> i think that's right. and you know, i also think that generally, you know, it's all about value delivered. right? if you deliver the requisite value, people get less sensitive about price. and look, it starts with knowing
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your customer, going at the right customer. if you have a product that costs a certain amount of money and you're targeting bargain hunters you're going to have an issue. you have to make sure your customer and your product are aligned and deliver value for services. >> i love that point. as we talk a lot about price, really what everyone should be concentrating on is value. >> i think actually when you talk to your customers you have to speak in that language, you have to frame what you're delivering around, let's talk about the value delivered here, as opposed to the price. it's a little bit -- it's subtle and it's an orientation thing. but i think it's a difference. >> i find it playing hard to get too. if you say, we may not be a good fit, sometimes people want to come back to you even stronger. so they have more respect for you. >> okay. well, thank you so much for all this advice. very helpful. we appreciate it. >> thank you. >> if any of you out there have a question for our experts just go to our website. the address is openforum.com/yourbusiness. there just hit the ask the show link to submit a question for
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our panel. the website is openforum.com/yourbusiness. or e-mail your questions and comments. the address is yourbusiness@msnbc.com. mo and michael had some really helpful advice about how to improve your company. now let's get some great ideas from small business owners like you. >> my advice is to other entrepreneurs is to cross-train your employees to do not just one activity but do several activities so when slow times come around you can take advantage of them and keep good employees working. overall the employees do appreciate that. >> for latino entrepreneurs they have to forget about their country, keep it in your heart, but you have a different environment. you have to adjust for the american culture. >> you run your own business, the first problem is you're running your own business. stop that. let someone else take care of the little things and push off as much as you can to someone else.
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not the important things and nothing about money. you want to focus on where your money's going. looking to get your business online but not sure where to start? check out our website of the week. citymax.com is a website builder where no html or website skills are required. choose a template, customize it, then go live. changes can be made any time you like. setting up your own website costs about $20 a month. web site. it's openforerun.copenforum.com. find more information to help your business grow. become a fan of show on facebook. we love getting your feedback. follow us on twitter. it's @msnbcyourbiz. next week a special edition focused on starting up and running a successful restaurant and food services business. meet an entrepreneur who looked
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at a building and saw not one, not two, but three different business concepts. >> i'm pretty crazy but i'm not crazy enough to just want to open up three businesses that close together. >> we'll tell you how she fit two restaurants and one bar into one space. till then, i'm j.j. ramberg. remember, we make your business our business. shazi: seven years ago, i had this idea. to make baby food the way moms would. happybaby strives to make the best organic baby food. in a business like ours, personal connections are so important. we use our american express open gold card to further those connections. last year we took dozens of trips using membership rewards points